THIS PAGE IN PREPARATION -- Short note only.
This page will link to pages describing some of the litigation in detail.
Criminal penalties for fraud are not large and have not been a deterrent. Violent crime is a major problem in the USA and the criminal courts are overloaded. Prosecution through the criminal courts is protracted and difficult.
As a consequence most fraud actions are prosecuted through the civil courts. Much larger sums are paid to settle these actions and these are a greater deterrent. These negotiated settlements often include a "no wrongdoing admitted clause" and more is paid for this.
The consequence of this for foreign countries is that multinational companies which have paid hundreds of millions of dollars for indulging in fraud and the misuse of citizens do not have a criminal record. There is no proof that they have indulged in any wrongdoing. They are indignant when this is suggested. This places the FIRB and state licensing bodies in an impossible position. If they reject a company under the probity provisions of regulations then they must be prepared for a legal challenge. They will then have to prove the entire case themselves bringing documents from the USA.
If US plans to include health care in international trade agreements are successful then the problems will be compounded. Any attempt to reject a licence will be appealed to the WTO. The WTO is interested in business and probity is not a consideration.
NME's 1991 structure:- In 1991 National Medical Enterprises operated through four major wholly owned subsidiaries. Three were broadly grouped as the specialty hospitals and this included three companies, Psychiatric Institutes of America (PIA), Recovery Centres of America (RCA), and Rehab Services Corp (RHSC). Its general hospital group comprised 35 US hospitals as well as its international division. Prior to its guilty plea it sold RHSC and amalgamated RCA and PIA to form NME Psychiatric Hospitals. It pleaded guilty in the name of this new merged subsidiary and because only one group was guilty was able to retain the right to medicare and medicaid reimbursement. It claimed that an infected appendage had been removed. It was required to sell all the specialty hospitals and its operations were restricted to general hospitals which in 1991 comprised only 35 of its 150 hospitals.
To escape its past NME chose the name Tenet Healthcare claiming that this name reflected core philosophies to which they now laid claim, particularly that of integrity.
7. New York Times, Wed June 29 1994 page D1, D3 (Allen R Myerson) "Hospital Chain Sets Guilty Plea: Kickbacks, Bribes Paid for Referrals"
8. Modern Healthcare July 4 1994 page 2, 13 "NME to pay fine of $379 million"
9. CCM Winter 1994 (by Vera Titunik) "How Christi Sulzbach and a team of in-house lawyers saved National Medical Enterprises from its own questionable past"
10. Case Numbers 94-0268 and 94-0269 United States District Court for the District of Columbia, "United States of America vs NME Psychiatric Hospitals, Inc (Defendant)
11. Case Number 1:94CV01505 United States District Court for the District of Columbia, "Securities and Exchange Commission (Plaintiff) vs National Medical Enterprises, Inc (Defendant)
OrNda Healthcare was formed when the company Republic Health Corp. changed its name. News reports indicate that OrNda is an Iroquois name that means "well-being." Like Tenet the new name was selected to help rid the company of its past woes, which in this case included a bankruptcy reorganisation. It was soon in trouble again and when purchased by Tenet/NME it was subject to an investigation. Tenet paid US $12 million to settle allegations of paying kickbacks to doctors.
Columbia/HCA has used the courts aggressively when they could be used to further their corporate ambitions. It is the subject of a number of Qui Tam whistleblower actions alleging fraud which have been joined by the US department of justice. It has set aside US $1 billion to settle these actions. A number of its staff face criminal prosecutions for fraud.
AGED CARE CHAINS
Aged care chains have also been the subject of large numbers of legal actions and of fraud investigations. This page will link to details.